Transfer Pricing: OECD updates to the rules on intra-group services

In brief

What happened?

On 1 June 2026, the OECD released a public consultation document proposing substantive updates to the guidance on intra-group services (Chapter VII of the Transfer Pricing Guidelines), with comments due by 22 July 2026 and a public consultation planned for November 2026.

The draft brings the guidance in line with the post-BEPS environment, strengthening the framework for the transfer pricing treatment of services and providing welcome clarification on areas that have long been sources of contention between taxpayers and tax authorities. The proposed updates touch on the benefits test, duplicative services, the distinction between shareholder and stewardship activities, cost allocation methodologies, and mark-up principles.

Importantly, the draft also addresses the increasingly relevant interplay between services and intangible property (IP), underscoring the importance of a robust and disciplined approach to the transfer pricing treatment and pricing of IP-enabled intercompany services. The guidance on Low value-adding intragroup services (LVAS) remains unchanged. The draft is not yet consensus guidance and should not be relied upon as such.

Why is it relevant?

The updated guidance carries immediate practical significance as it provides taxpayers with greater clarity on the principles applicable to intra-group services. For those currently facing audits or disputes, the clarifications offer a stronger reference framework to support or defend their positions. For those structuring new arrangements, the guidance provides a more predictable basis on which to design and document intercompany service models. And for all taxpayers, it presents a timely opportunity to review existing positions and ensure continued compliance against the evolving standard.

Given the pervasive role that intra-group services play across multinational groups, especially in the Middle East, the practical reach of these proposed revisions is broad. A significant number of Middle Eastern groups operate through layers of intercompany services not limited to head office support services, centralized shared services, technology and IT services, strategic management services.

Research & Development support services, franchise & brand services, and more. Hence, intercompany services generally tend to attract significant scrutiny and are often front and centre of transfer pricing disputes and controversy in the region. Taxpayers with material inbound or outbound service flows will need to proactively assess how the proposed updates apply to their current arrangements.

The consultation period is also an opportunity to seek clarity and challenge disproportionate compliance burdens.